Week 1B Assignment

Farid Ardika Dasum / 29120020 / YP 63-C

Please submit the assignment before the deadline.

Questions :
1. In 2004, Bob's Burgers charged $3.50 for a quarter-pound hamburger with all the fixin's,
and sold 7,500 of them. In 2005, although Bob raised the price to $3.75, sales of his
burgers rose to 8,200. Use the concepts of a shift in the demand curve versus a
movement along the demand curve to explain why this increase in sales does not
represent a violation of the law of demand.
Answer :

Based on my opinion regarding the curve above, it does not violate any regulations or
law of demand. Because, I believe there are many possibilities that happen in one year
or into the next year. As market income may increase, consumer preference for
hamburgers may also increase, as will the price of Bob's burger competitor will increase,
this will happen continuously. All of these things can cause shifts across the demand
curve. A hamburger price increase of 25-cents may cause a leftward movement along
the demand curve, but that movement is more than offset by an outward shift of the
entire curve.

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Week 1B Assignment
Farid Ardika Dasum / 29120020 / YP 63-C

2. In 2004, the price of soybeans was $3.50 a bushel, and the Jones family farm planted
7,500 acres of them. In 2005, although the price of soybeans fell to $3.25 a bushel, the
Jones family farm planted 8,200 acres of them. Use the concepts of a shift in the supply
curve versus a movement along the supply curve to explain why this increase in
soybean acreage does not represent a violation of the law of supply.
Answer :

I think based on the curve above, the assumptions of other things do not violate
regulations or supply laws. Because, I consider that there are many possibilities in one
year or into the next year. This is due to an increase in supply that will more than offset
the decrease in quantity caused by the increase in soybean prices. Fertilizer and other
production costs may decrease. It is possible that pesticide technology has developed
rapidly. Farmers will anticipate an increase in foreign demand and an increase in
soybean prices in the future. The government may have started booting or started a
program to subsidize soybean production. All of these things can cause shifts across the
supply curve. A drop in the price of soybean by 25-cents may cause a downward
movement along the supply curve, but that movement is more than offset by an outward
shift of the entire curve.

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Week 1B Assignment
Farid Ardika Dasum / 29120020 / YP 63-C

3. Stuffed-Crust Pizza is a new pizza introduced by Pizza Hut. What happens to the
equilibrium price and equilibrium quantity of Stuff-Crust Pizza in each of the following
situations?
a. Due to weather conditions, the output of wheat decreased and the price of wheat
flour increased.
Answer :

Wheat's price increases when its supply is reduced. The supply curve for pizza
moves to the left as the cost of making a unit of pizza increases, the equilibrium
price rises, and the equilibrium amount decreases.

b. The price of beer decreased.

Answer :

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Week 1B Assignment
Farid Ardika Dasum / 29120020 / YP 63-C
Beer and pizza are complementary items for many people. The quantity of beer
demanded rises as the price of beer falls, shifting the demand curve for pizza to
the right. As a consequence, both the equilibrium price and the equilibrium
quantity of pizza increase.

c. Dominos Pizza introduced a similar pizza that sold for $1 less than the one sold
by Pizza Hut.
Answer :

If households consider the two brands of pizza to be replacements, demand for

Domino's pizza increases, while demand for Pizza Hut's pizza decreases,
lowering its equilibrium price and quantity.

d. A recession reduced households’ income.

Answer :

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Week 1B Assignment
Farid Ardika Dasum / 29120020 / YP 63-C

If Stuffed-Crust Pizza is a common good, a decline in consumer income reduces

demand, lowering the equilibrium price and quantity of pizza. If Stuff-Crust Pizza
were a poor quality product, the reverse would occur.

e. A new oven technology reduced the time it takes to bake a pizza.

Answer :

The new technology reduces the cost of making a pizza machine. The
equilibrium quantity increases and the equilibrium price falls as the supply curve
moves to the right.

4. John and Steve are roommates at Siberian University. They are planning to have a party
this coming weekend and need to go shopping for munchies. They know all of their
friends like nacho cheese flavored tortilla chips, so that is the only type of munchie they
plan to buy. After pooling their cash, they take $18 and head out to the nearest grocery
store. Walking down the chip aisle, they fill their cart with 6 bags of Tostada brand chips
at $3 per 14-ounce bag. Continuing down the chip aisle, they see Durango brand chips
are available at $2 per 14-ounce bag, so they put all of the Tostada chips back and
instead purchase 9 bags of Durango chips. Is John and Steve’s behavior consistent with
“the law of demand?” Explain. (Extra Credit: If they hadn’t changed their minds, would
they have violated the law of demand?)

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Week 1B Assignment
Farid Ardika Dasum / 29120020 / YP 63-C

Answer :
- Yes. The action of John and Steve is consistent with the rule of demand. The law
of demand states that the lower the price of a good, the more it will be
demanded, all other factors being equal. As the price of chips dropped from $3 to
$2 per bag, John and Steve raised their purchase from 6 to 9 bags. The industry
in question is the "chips market," which is a broad term.
- If they hadn’t changed their minds, I think they would not have actually broken
the rule of demand if they had not changed their minds. Durango chips are
treated differently than Tostada chips in this situation. Perhaps the Durango chips
aren't as tasty as the others.

5. Sandy is an excellent student at Hildegard College. To earn money to pay her tuition,
Sandy sells “Lecture Summaries” from her class notes. She charges $5 for one week of
lecture summaries, and $15 for four weeks of lecture summaries. Is Sandy’s behavior
consistent with “the law of supply?” Explain.
Answer :
Yes, Sandy's actions are compatible with the law of supply, mostly because the price will
rise as the supply increases. Consumers would be able to buy more if the price falls,
according to the rule of demand. The difference is the price of four weeks, so Sandy
must set a price of $20 but only sets a price of $15, because Sandy offers coupons for
purchasing goods with a four-week plan in order to attract more interest from customers.